Raia Drogasil S.A.

Transcription

Raia Drogasil S.A.
Raia Drogasil S.A.
An Industry Leader with an Unparalleled Combination of
Scale, Efficiency and Financial Flexibility
BTG Pactual XIII CEO Conference – Grand Hyatt, São Paulo (February 14th and 15th)
1
Disclaimer
This presentation has been prepared for internal use only in order to allow a better market understanding regarding the details of the
association between Raia S.A. and Drogasil S.A. (“Transaction”), and was based on assumptions made by the management of Raia
and Drogasil, as well as on evidences that make these the most likely scenarios.
Future expectations related to this presentation shall consider the risks and uncertainties that involve any activities and transactions,
and that are beyond the control of the companies involved in this Transaction (including, but not limited to, political and economic
changes, volatility in the exchange and interest rates, technological changes, inflation, financial disintermediation, competitive
pressure over products and prices, changes in corporate and tax regulation, and also the approval of the Transaction by Raia and
Drogasil’s Shareholders’ Meetings, and/or by relevant authorities). Therefore, any forward-looking statements or projections contained
herein may materially differ from the actual future results of the companies and their businesses.
This material is not intended to be the basis for assessing the performance of Raia and/or Drogasil in connection with the Transaction,
nor is it intended to contain all the information necessary for such assessment. It does, however, reinforce Raia and Drogasil’s strong
commitment to transparency and the cementing of close investor relations.
This presentation does not substitute or alter any information available in the terms of the current legislation and applicable law.
2
Presenters
Eugênio De Zagottis
Investor Relations and
Corporate Planning
(Head)
Leonardo Corrêa
Investor Relations and
Corporate Planning
 Former IR & Commercial VP of Droga Raia, with 11 years of industry experience.
Worked previously as a consultant for McKinsey and for Arthur Andersen.
 MBA from the University of Michigan, BBA from FGV-SP
 Former Corporate Planning Director and IR at Droga Raia. Worked previously at
Johnson & Johnson, Pfizer and Kraft Foods
 MBA from Insper (IBMEC - SP), B.S. in Economics from UFRJ
3
Raia Drogasil S.A.
 Brazil´s largest drugstore chain in revenues, according to IMS Health. R$ 4.5 billion in revenues, R$ 248 MM of
EBITDA and R$ 129MM of net income (Sep’11 - last twelve months);
 Merger of equals between Raia S.A. and Drogasil S.A., two leading Brazilian drugstore chains with 182 years of
combined history, with shared control by majority shareholders who are members of the founding families;
 779 stores in 9 states of Brazil, which represent 80% of the Brazilian pharmaceutical market, and a national
market share of only 8.7% (Sep’11). Recently announced the entrance into 3 new states (MS, MG and BA);
 Differentiated business model with a dual brand strategy, high returns on invested capital, and strong potential
synergies and economies of scale to be captured;
 Strong organic growth & acquisition track record, with a combined net addition of 448 stores since 2007, a
significant increase over the 331 stores at the end of 2006;
 Unparalleled combination of scale, efficiency and financial flexibility in the Brazilian drugstore industry.
44
Proven Growth Track Record
Merger
Accelerated Growth
Foundations for Growth
906*
IPO
776
(Raia)
688
IPO
(Drogasil)
582
3,949
515
3,382
409
1,860
2,474
1,595
331
228
243
267
894
291
1,081
673
745
327
370
467
346
375
427
523
2001
2002
2003
2004
558
304
1,837
1,538
1,304
645
1,148
831
721
1,788
659
818
1,006
2005
2006
2007
Gross Revenues
Drogasil
Gross Revenues
Droga Raia
2,089
1,327
2008
2009
2010
2011E
2012E
Stores
* Assumes our gross store opening guidance, disregarding eventual store closings that may happen until the end of the year.
5
Contents of the Presentation
1
Raia Drogasil S.A. – Creating an Industry Leader with an Unparalleled
Combination of Scale, Efficiency and Financial Flexibility
2
Fragmented Market, in the Process of Consolidation
3
Operation supported by two leading brands with strong growth prospects and
synergy potential
4
Proven Track Record in Delivering High Growth with Margin Expansion
6
Largest and Most Profitable Player in the Industry
Number of Stores
Gross Revenue
EBITDA
(2010)
(Pro-Forma – 2010)
(Pro-Forma – 2010)
Stores
1º
Revenue
EBITDA
(R$ million)
(R$ million)
Raia Drogasil
689
1º
Pacheco São Paulo
4,166
2º
Pacheco São Paulo
682
2º
Raia Drogasil
3,949
3º
Brazil Pharma1
~525
3º
Pague Menos
4º
Pague Menos
400
4º
Brazil Pharma1
1º
Raia Drogasil
219
2º
Pacheco São Paulo
166
2,235
3º
Pague Menos
145
~2,070
4º
Brazil Pharma1
~115
Source: Companies, ABRAFARMA and Exame Maiores e Melhores 2011 magazine
Note:
1 According to research reports and the management presentation on Big Ben and Sant’Ana
2 According to Revista Exame Maiores e Melhores 2011 magazine
7
Unparalleled Combination of Scale, Efficiency and Financial Flexibility
Operational Highlights (Sep/11)
Raia Drogasil
High Scale
Number of Stores (Sep/11)
Gross Revenue (R$ millions, LTM1)
Geographic Presence (Sep/11)
384
359
743
2,187
2,320
4,507
MG, RJ, SP, PR, SC, RS
DF, ES, GO, MG, RJ, SP
SP, RJ, MG, PR, RS, SC,
DF, GO, ES
Number of employees (Sep/11)
8,316
7,962
16,278
Sale Area (m2 – Sep/11)
56,766
47,876
104,642
564
25.8%
593
25.6%
1,157
25.7%
106
4.8%
142
6.1%
248
5.5%
45
2.1%
84
3.6%
129
2.9%
636
634
1,270
Cash and Equivalents (Sep/11)
230.1
170.2
400.2
Net Cash (Sep/11)
151.0
91.5
242.5
High Operating Efficiency
Gross Profit
(% of Gross Revenue, LTM)
EBITDA
(% of Gross Revenue, LTM)
Net Income
(% of Gross Revenue, LTM)
High Financial Flexibility
Equity (Sep/11)
8
Controlled by Shareholders who are Members of the Founding Families
Raia’s Majority
Shareholders: 20%
Pipponzi
Gávea
Family
(13.8%)
Drogasil’s Majority
Shareholders: 20%
Pragma
(1.3%)
(4.9%)
Pires¹
Galvão²
Family
Family
(17.3%)
(2.7%)
Shares tied to
shareholders agreement
with lock-up of 10 years
Management
Pipponzi
Family
Pires¹
Galvão²
Family
Family
(0.8%)
(3.1%)
(2.7%)
Free shares (voting with
the shareholders
agreement)
40.0%
6.6%
0.5%
Free Float
Float
Free
52.9%
Raia Drogasil S.A.
►
Joint control by the majority shareholders of both companies, who will always have the same number of shares tied
to the shareholders agreement during its whole term (10 years)
►
Tied shares are subject to a 10-year lock-up, which will be progressively reduced to represent 30% of the current
stock capital after the fifth anniversary of the agreement.
Note:
1 Carlos Pires Oliveira Dias and Regimar Comercial S.A.
2 Tantra Participações Ltda
9
Strong Management Team and Corporate Governance Standards
Strong Governance, Aligned Management Incentives
 Active Supervisory Committees (Operations, Expansion,
Human Resources and Audit) reporting to the Board
 Stock-option plan for Senior Executives
Qualified Management Team
Name
Position
Board Members
Name
Position
Experience
Antonio C. Pipponzi
Executive Chairman
• Former Chairman and CEO of Raia S.A.
(1984 – 2011), 35 years of industry
experience
Plinio Musetti
Board Member
• Partner of Pragma Patrimônio and
former Chairman of Raia S.A.
• Former partner of J.P. Morgan Partners
• Former Director and executive of Raia S.A.
• Former Director of Zambelletti
Pharmaceutical Company
Age
Past
Experience
Cláudio Roberto Ely
CEO
62
Drogasil,
Banco Ger. Com,
Grupo C. Correa
14
Franco Pipponzi
Board Member
Eugênio De Zagottis
VP – Investor Relations
41
Droga Raia,
McKinsey,
12
Carlos Pires de O. Dias
Board Member
• Former Chairman of Drogasil
• Director of several companies of the
Camargo Correa Group
Ricardo Castro Azevedo
VP - Finance
63
Drogasil, Banco
Multiplic
15
Renato Pires de O. Dias
Board Member
• Former Director of Drogasil S.A.
Fernando Kozel Varela
VP - Operations
41
Droga Raia,
Arthur Andersen
16
Paulo Sérgio C. Galvão
Board Member
• Former Director of Drogasil S.A.
• Director of Klabin S.A.
Marcello De Zagottis
VP – Commercial
36
Droga Raia,
Borders
Bookstores
8
José Paschoal Rossetti
Independent Board Member
• Director of Grupo Fleury and Boticário
• Professor of Fundação Dom Cabral
• Consultant on Strategy and Governance
Rosangela Lutti
VP – Human Resources
56
Droga Raia,
Contax, Bunge,
Camargo Correa
2
Itamar Correia Silva
Independent Board Member
• Former Director of Raia S.A.
• Director of J. Macedo, former executive of
Natura and Unilever
Antonio Carlos de Freitas
VP – Retail
61
Drogasil,
Unibanco
13
Jairo E. Loureiro
Independent Board Member
• Director of Planibank Investimentos and
of Hypermarcas
• Former director of Drogasil S.A.
Years in
the Industry
10
Post Merger Integration with Support of Reputable Consulting Companies
• Coordination of the activities
Integration Office
and of the timetable for the PMI
• Communication, culture & change management
• Synergy mapping and tracking
• Advised by McKinsey & Company
System Selection
• Assessment of the existing IT platforms of Raia and Drogasil
• Definition of the systems to be adopted
• Advised by McKinsey & Company
Definition of the Organizational
Structure and Processes
Purchasing & Trade Marketing
Integration
Branding Strategy
Compensation Alignment
• Assessment of the current organizational structures and processes
• Definition of the new organizational structure and processes
• Advised by McKinsey & Company
• Alignment of the existing purchasing and trade marketing terms
• Definition of a win-win commercial policy to improve our purchasing terms by
incentivizing high margin & high performance suppliers
• Advised by McKinsey & Company
• Assessment of the current brand essences, identities and customer profiles
• Definiton of the new brand positioning for Droga Raia & Drogasil
• Definition of the the new corporate essence, identity & brand
• Advised by Thymus Branding
• Assessment of the existing career and compensation programs
• Development of a new career program and compensation policy
• Realignment of allemployees under the new career program and compensation policy
• Advised by the Hay Group
Source: Companies
11
Contents of the Presentation
1
Raia Drogasil S.A. – Creating an Industry Leader with an Unparalleled
Combination of Scale, Efficiency and Financial Flexibility
2
Fragmented Market, in the Process of Consolidation
3
Operation supported by two leading brands with strong growth prospects and
synergy potential
4
Proven Track Record in Delivering High Growth with Margin Expansion
12
Accelerated Pharmaceutical Market Growth
Generics Market
Pharmaceutical Market
(R$ Billion)
(R$ Billion)
8,8
43,0
36,2
6,2
30,2
23,6
26,4
4,5
3,7
2,9
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
13
Favorable Demographic and Macroeconomic Trends
Brazilian Population above
60 years old
Annual per Capita Pharma Spending
Selected Countries
(Million of people)
(US$ in 2009)
50
US$ 500MM
80
Molecules Exposed
to Generics
Total Demand
65
* Lipitor (Pfizer), Viagra (Pfizer), Diovan (Novartis), Crestor
(Astra Zeneca), Atacand (Astra Zeneca), Zyprexa (Lilly),
Seroquel (Astra Zeneca), Singulair (MSD), Micardis
(Boehringer), Benicar (Sankyo), Aprozide (Sanofi), Aprovel
(Sanofi), Others
USA
988
France
655
Japan
635
Germany
512
Argentina
Brazil
142
% of Total Population
Mexico
8.1%
Source: IMS Health
Products Losing Patents*
2010 to 2012
10.0%
13.7%
18.7%
Source: IMS Health, Population Reference Bureau 2009
Source: IMS Health
14
Fragmented Drugstore Market
% of Stores
24,2%
Match
Base
% of Sales
100%
100%
1,9%
2,0%
2,1% 2,2%
2,5%
0,7% 0,8%
1,2% 1,3%
0,4% 0,5%
0,8%
0,9% 1,0%
1,3%
1,0%
1,4% 1,4%
1,9%
95%
3,3%
3,5%
0,6%
0,8%
0,9%
1,2%
1,4%
1,2%
1,1%
1,1%
15,8% 16,4%
16.4% 16,8% 18,6%
16.8%
18.6%20,2% 22,5% 23,0%
20.2%
4,4%
5,5%
5.5%
4,9%
5,4%
5.4%
1,9%
3,7%
90%
2,1%
2.1%
8,2%
3,7%
4,3%
8,6%
8.6%
5,6%
5.6%
2,4%
2.4%
9,0%
6,4%
6.4%
80%
6,4%6.4%
6,7%
6,0%
6.0% 6,5%
6,9%
6,5%
3,4%
3,3%
6.5%
2,9%
2.9% 3,3%
3.3%
10,4%
6,6%
300.000
250.000
10.4%
11,7%
60%
11.7%
11,5%
80%
400.000
350.000
6,3%
6.3%
9.0%
92,5% 92,0%
91,8%
200.000
12,4%
150.000
91,1% 90,8%
90,3%
64,8%
89,3%
62,0% 59,9%
55,7%
51,9%
40%
4%
0%
0%
2005
2006
ABRAFARMA TOP 5
2007
2008
2009
2010
ABRAFARMA TOP 6 - 10
2004
2005
2006
2007
OTHERS ABRAFARMA
2008
100.000
49,0% 48,3%
4%
2004
450.000
2,8%
3,5%
3,7%
Average Monthly Sales per Store (R$)
2009
2010
SUPERMARKETS
50.000
2004 2005 2006 2007 2008 2009 2010
OTHER CHAINS
INDEPENDENTS
Source: IMS Health and Abrafarma
15
Accelerated Growth in HPC, with Shifting Share Towards Drugstore Chains
HPC Market
(R$ Billion)
HPC Growth by Channel – Weighted
Volumes
Market Share by Channel
(% of Weighted Volumes)
12,7%
27,5
Index: 2004 = 100
6,4%
6,4%
6,0%
5,8%
7,9%
26,9%
27,7%
27,2%
26,4%
23,6%
212,1
24,9
21,7
182,8
19,6
17,5
9,0%
15,4
11,6%
14,2%
15,1%
166,9
16,5%
159,1
13,5
131,1
57,5%
54,3%
52,6%
52,7%
52,0%
116,1
104,4
106,2
107,0 112,6
106,1
99,6
100,0
2004
2005
2006
2007
2008
2009
2010
2004
2006
2008
2009
2010
2004
104,9
2005
108,7 108,7 104,9 107,8
2006
2007
Supermarkets
Supermarkets
Independent
Drugstores & Beauty
Source: ABIHPEC
Drugstore Chains
Traditional
2008
2009
100,9
2010
Drugstore Chains
Independent Drugstores & Beauty
Source: AC Nielsen, Company analysis
16
Contents of the Presentation
1
Raia Drogasil S.A. – Creating an Industry Leader with an Unparalleled
Combination of Scale, Efficiency and Financial Flexibility
2
Fragmented Market, in the Process of Consolidation
3
Operation supported by two leading brands with strong growth prospects and
synergy potential
4
Proven Track Record in Delivering High Growth with Margin Expansion
17
3
Leading
Brands with Strong Identities and Coordinated Strategies
Coordinated brand strategies: differentiation of consumer targets and store formats
►
106 Years of History
►
76 Years of History
►
49th most valuable brand in Brazil¹
►
35th most valuable brand in Brazil¹
►
Second in number of stores and
►
Fifth in number of stores and third
fourth in revenue
in revenue
 Maintenance of existing customers who have a preference for a specific brand
Addition of new customers by differentiating the value proposition of the brands
Note:
1
Joint survey by ISTOÉ DINHEIRO and BrandAnalytics/Millward Brown, in 2011
18
Strong Geographic Presence and High Growth Potential
Market Share by State (Sep/2011) 1
Geographic Presence (Sep/2011)
19.4%
15.4%
9.3%
13.5%
DF: 52 stores
MG: 57 stores
Raia: 24 (BH)
Drogasil: 34 (Countryside)
GO: 33 stores
Total: 743
Raia: 384
Drogasil: 359
8.7%
SP: 482 stores
Raia: 265
Drogasil: 217
8.3%
ES: 16 stores
7.4%
6.6%
RJ: 51 stores
Raia: 44
Drogasil: 7
PR: 35 stores
4.1%
2.3%
4.9%
5.1%
4.4%
10.1%
SC: 6 stores
4.6%
1.1% 0.9%
RS: 10 stores
0.5%
Regions of Operation - Drogasil
Regions of Operation - Raia
Regions of Operation - Drogasil and Raia
Brazil
SP
►
Presence in states that comprise 78% of the Brazilian pharmaceutical market
►
Established platform to grow into new markets
DF
GO
ES
MG
PR
RJ
RS
SC
Source: Companies
1 Note: Market share according to IMS Health, for the month of September, 2011
19
Decentralized and Complementary Distribution Structure
Distribution Centers
3
Aparecida/GO
2
6
4 1
5
B. Mansa/RJ
Contagem/MG
São Paulo/SP
São Paulo/SP
Curitiba/PR
Distribution Center
Area of coverage
Source: Companies
1
2
3
4
5
6
►
►
►
►
►
►
►
►
►
►
►
►
Drogasil DC in São Paulo (SP)
Area: 17,000 m2
Drogasil DC in Contagem (MG)
Area : 6,200 m2
Drogasil DC in Aparecida (GO)
Area : 12,600 m2
Raia DC in São Paulo (SP)
Area : 19,000 m2
Raia DC in Curitiba (PR)
Area : 6,000 m2
Raia DC in Barra Mansa (RJ) – to
be opened
Area : 8,000 m2
20
Competitive Gains by Capturing Hard and Soft Synergies
►
Coordinated growth in existing markets
►
Adoption of best practices in sales
►
Accelerated entry into new markets
►
►
Gains from the selective closure of redundant stores
Proprietary PBM leveraging the existing corporate and institutional
contracts of each company and obtaining new clients
►
Sharing of existing product and promotional agreements
►
Opportunities to develop a joint e-commerce platform
Optimization of the
Store Portfolio
►
Solid and flexible capital structure
►
Potential use of shares, with enhanced
liquidity, as a currency for acquisitions
►
►
Experience in acquisitions and postmerger integration
Selected
Acquisitions
Raise the
competitiveness
of our brands
before
consumers
Leveraging of acquired assets by
choosing from two brands in the
absorption of each store
Revenue
Growth
Gross Margin
Increase
►
Adoption of the best purchasing conditions
and gross margin policies
►
Enhancement of trade allowances by
applying best practices and revaluing
promotional spaces
►
Introduction of private label products by
leveraging the combined scale
Efficiency
Gains
►
Strengthening of the management team and of the
combined management structure
►
Logistics optimization through complementary DCs
and by increasing the shipping density
►
Integration of systems and processes, and application
of best practices
►
Dilution of corporate expenses and elimination of
redundancies
21
Launching our Main Private Label Platform, with Premium Prices & Margins
22
Contents of the Presentation
1
Raia Drogasil S.A. – Creating an Industry Leader with an Unparalleled
Combination of Scale, Efficiency and Financial Flexibility
2
Fragmented Market, in the Process of Consolidation
3
Operation supported by two leading brands with strong growth prospects and
synergy potential
4
Proven Track Record in Delivering High Growth with Margin Expansion
23
Accelerating Sales Comps
Growth – Total Sales
Growth – Mature Stores
Growth -Same Store
36.7%
24.9%
15.5%
20.9%
19.6%
17.4%
16.8%
14.0%
14.9%
9.4%
8.8%
6.5% 6.4%
10.7%
7.3%
6.0%
7.1%
3.9%
4.0%
2.0%
2009
2010
3Q10
4Q10
1Q11 2Q11
3Q11
2009
2010
3Q10
4Q10
1Q11
2Q11
3Q11
2009
2010
3Q10
2.7%
4Q10
1Q11
2Q11
3Q11
24
Delivering High Growth with Margin Expansion
Gross Margin
Gross Revenues
(R$ million. % of Gross Revenues)
(R$ million)
25.9%
24.9%
23.7%
23.3%
984.9
3,949.1
3,435.6
3,382.3
2,870.4
2,474.2
2008
2009
2010
25.0%
9M10
788.9
891.3
718.5
586.3
9M11
2008
2009
Operational Expenses
2010
9M10
Adjusted EBITDA
(% of Gross Revenues)
(R$ million.as a % of Gross Revenues)
6.0%
19.7%
3.8%
9M11
18.4%
3.3%
19.4%
19.2%
3.2%
3.3%
20.3%
4.3%
4.9%
5.6%
5.8%
219.3
199.9
3.5%
170.9
165.1
105.5
15.9%
15.2%
16.2%
2008
2009
2010
* Adjusted for non-recurring events
16.0%
9M10
16.8%
9M11
2008*
2009*
2010
9M10
9M11
25
Consistent Earnings Growth
Depreciation
Net Financial Expenses
(R$ million, as a % of Gross Revenues)
Net Profit
(R$ million, as a % of Gross Revenues)
(R$ million, as a % of Gross Revenues)
3.1%
1.9%
1.7%
1.9%
1.8%
2.0%
2.3%
2.3%
2.4%
1.7%
107.4
73.6
21.5
67.3
90.7
17.6
56.4
76.2
13.1
52.1
69.6
46.3
0.9
41.1
2008
2008
2009
2010
9M10
2009
2010
9M10
9M11
2008
9M11
2009
2010
9M10
9M11
(24.2)
26
Inspiring References from the US Market
27